With the increasing number of people struggling with debt there are more and more credit agencies on the market to choose from. But very few customers know what they can do to help you erase bad credit and what are the consequences and long term benefits of signing up for a credit agency's service. If you have been fighting alone with bad credit you might need some help. But what is the help these companies can provide you exactly?
There are misconceptions about credit reference agencies or Credit Bureaus. They do not change anything on your credit file. All they do is collect the information about you, your credit, your payments and employment and put it in a huge database of customers. They do not do investigation work, as all the details are getting to them automatically. Every application, new account opened, closed, even utility contracts are held in your credit file, as well as your monthly subscriptions.
A credit reference agency provides their database to lenders, employers, committees and utility companies to review through the application process. You may not even know how many times your details are getting searched, so it is a wise decision to find out exactly what is on your credit file and how many companies have used the database. The more searches you have in a certain period of time the more your score is reduced.
Is there a formula of how the credit score is calculated?
There is a rule how credit agencies are assessing your financial situation and your capabilities to pay back credit, but it is hard to understand for outsiders. There are some simple things you can remember though, if you want to keep your credit rating.
- The amount of debt you have outstanding determinations affordability
- The number of searches reduce your credit score
- Every payment you make on your credit on time builds up your rating
- Every payment you miss damages your credit rating, much more than payments on time build it up.
- Having a financial product with someone with bad rating can make your application for finance turned down.
- Having a bad credit rating makes obtaining finance more difficult and expensive.
If you are about to learn about your credit score and what are the points on your credit file that made your credit rating go down, you need to get a copy of your credit file. You can do it online or contact one of the Credit Bureaus with all your addresses for the past six years. It will help you get the information you need and you can get the scoop how your creditors currently vies you as a customer.